MGM Resorts third-quarter loss narrows, margins disappoint
LOS ANGELES (Reuters) - MGM Resorts International (MGM.N) posted a narrower third-quarter loss on Thursday and was optimistic about a planned new casino in Massachusetts, although lower-than-expected margins at its Chinese and Las Vegas operations disappointed some analysts.
MGM's net loss slimmed to $31.9 million, or 7 cents a share, from $181.2 million, or 37 cents, a year earlier. Excluding items, analysts, on average, looked for a loss of 3 cents a share, according to Thomson Reuters I/B/E/S.
Revenues rose 9.2 percent to $2.46 billion.
UBS Analyst Robin Farley said the results fell shy of her expectations, citing Las Vegas margins of 22 percent versus Wall Street's estimate of 23 percent, and down from 24.8 percent in the second quarter.
At its operations in Macau, the Chinese gambling enclave, Farley said margins were also slightly below her estimate.
Shares dropped 4.4 percent to $19.39.
MGM CEO Jim Murren said he was confident his company would pass regulatory suitability checks for a planned new development in Massachusetts despite recent "drama" involving Caesars Entertainment Corp's (CZR.O) withdrawal from a $1 billion casino venture in the state.
Caesars pulled out of its project, which involved a casino venture with the operator of Boston's Suffolk Downs racetrack, after investigators from the Massachusetts Gaming Commission raised concerns about its suitability for a state gaming license.
MGM and other operators like Wynn Resorts (WYNN.O) are currently bidding for Massachusetts licenses and Wynn CEO Steve Wynn said last week the licensing process had been "cumbersome".
But MGM's Murren, who has been planning an $800 million casino on 14.5 acres in Springfield, a city in Western Massachusetts, said it has been smooth so far.
"I cannot speak for the other operators. There's been an awful lot of activity and drama there. But we like the process. It has been very transparent to us and we believe there is no reason why we would not be found suitable. And as I said earlier, the state has indicated that it would like to make a determination by April I think of next year," he said.
"We believe that we have great plan for Springfield and we have obviously been chosen by the city of Springfield to deliver on this vision. We have had an extraordinarily very close relationship with this process from the beginning.
"We feel like we have delivered on everything that we need to deliver on. And that we see no reason whatsoever that we would not be found suitable there," he said.
A company spokesman said the development and proposal process for MGM Springfield started in 2012. It is proposed as a mixed-use project with a 225-room hotel, apartments, restaurants and shops in a section of downtown Springfield.
"We expect to learn of our regulatory suitability next month (November), and a potential final regulatory decision in the first half of 2014. With approvals, we would expect to begin operations in 2016," said company spokesman Clark Dumont.